Why Millennials Are Not Investing?

Millennials live in the moment. That’s why they enjoy Snapchatting about what they are doing, Instagramming the food they are eating, and tweeting about getting ready for a party—or something.

Investing? That’s not in the vocabulary of most millennials because that’s not something they can brag about in their social media accounts. It’s something they will reap in the future, hence, uncool.

But there’s another reason why millennials cannot be bothered with investing: It’s confusing!

According to a 2016 survey by Harris Poll—commissioned by Stash, an investment app for millennials—four in five millennials don’t invest in the stock market. Of the 80 percent who don’t have investments, 40 percent say they don’t have enough money to start investing. About 13 percent say they are still paying their student debt. About 38 percent of millennials think they need at least $1,000 to invest in the stock market.

Women, in particular, found investments confusing—about 76 percent of those surveyed said so. Sixty percent of them believe that only “old, white men” invest in the stock market. The study surveyed close to 500 millennials—ages 18 to 34.

If there is one thing that can be gleaned from the survey, it’s that millennials need to be educated about investing. One important lesson they need to learn: Compound interest. Time is an investment’s best friend. And time is exactly what millennials have. Compound interest refers to the amount your investment will earn through time. The oldest millennial would be 35. That means he still has about 30 years before he will retire. At a five percent interest, an older millennial’s $1,000 could become over $4,000. And that’s only if you don’t do something about it—if you don’t add more to the initial investment.

Imagine if younger millennials start investing early. For the same amount, a 25-year-old could grow his $1,000 to over $7,000 for the same five percent interest, by the time he retires.

As earlier mentioned, the biggest hindrance to investing is the lack of money. Older millennials find themselves without extra money to invest because they are already starting their own families—they need a house, a vehicle upgrade and some may even need to send their kids to school. For the younger millennials, they prefer to spend their money on traveling and most of them have resigned to the fact that youngsters do not have money.

According to SurveyMonkey, 45 percent of the millennials have spent more on coffee than on retirement plans. The survey interviewed close to 2,000 millennials, most of whom admitted to struggling with the management of their finances. Sometimes, it all boils down to financial management.

Each person should set aside 10 to 15 percent of his income for the future either in retirement savings or investment plans. As for the regular bills that need to be settled: housing, utilities, student loan, etc., it helps if payments are automated so that these will deduct directly to the bank account. This way, one doesn’t have to struggle with late payments. And this way, one will be forced to spend only they money left in the bank after all the bills have been settled.